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Thursday, 8 May 2014

Gov’t grants housing contracts to friendly companies

The government will grant a contract to build the Pyinmapin Housing Project to First Myanmar Investment Ltd (FMI), without any tender process.

The government and FMI will own a 30/70 percent respective stake in the project, which will include 1600 flats for middle-income families and around 1100 for lower-income families.

Sources close to the project say that the FMI was to be given the project since the end of last year without announcing a tender, as per usual for government contracts. Even upper-levels of government approved it.Another government housing project, Pearl Garden Housing, will also include 27,000 flats. The two projects are to be meant for lower-income families as and will be built on public land. But sources indicate that the Pearl project only targets the middle-income families.

Recent reports show that only companies close to the government have been granted contracts on public housing projects.

Shwe Than Lwin Company was given a green light to build housing on a ten acre plot located between Sedona Hotel and the Central Bank. The company gave back this plot to the government on the grounds that it would not make a profit, only to change its mind and request for the land back as soon as the project was deemed profitable.

The lack of competitive bidding systems has caused a loss for the public in general. Foreign companies should also be invited to develop affordable housing projects rather than giving contracts to companies who are more interested in turning a profit that providing decent and affordable housing.

The government often gives the land while the construction companies fund the construction costs for all affordable housing projects.

The profit sharing ratio between the government and company is either 50:50 or 49:51. However, the profit sharing ratio of Pale Garden housing project is 30:70 which is lower than usual.